Only PM And A Select Few Not Affected By Notes Ban

Published: January 09, 2017 10:16 IST

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On January 5, Pranab Mukherjee, the President of India, made his first authoritative remarks on the demonetisation issue. While welcoming moves to tackle corruption and black money - who wouldn't? - as a wise and experienced public servant and trained economist and former Finance Minister, he warned against gimmicky quick-fixes: "Demonetisation...may lead to a temporary slowdown of the economy. We all will have to be extra careful to alleviate the suffering of the poor, which might become unavoidable ..."

To us in the Trinamool Congress, the President's careful but clear words were a vindication. He reflected our concerns entirely. India was promised a miracle in the 50 days starting D-Day - Demonetisation Day or November 8. The miracle is nowhere in sight and the bad news just grows and grows, for ordinary people, for the economy, for the country.

So now that the 50 days sought by the Prime Minister are behind us, how does one look back at the horror experience called demonetisation and its aftermath? A few days ago, I wrote on 25 inexplicable facts related to the demonetisation disaster and dated to a period before November 8. Today, I would like to present 25 facts, not opinions, to mull over as one waits outside the ATM (yes, the wait continues). They refer to the period following November 8:

1. As of January 6, 2017, 116 people have died due to demonetisation. This is a macabre death count that the country is being forced to maintain.

2. From November 8 to December 30, 2016, there were at least 60 policy changes on demonetisation of currency and exchange, withdrawal and banking transactions related to the high-value notes driven out of circulation.

3. The value of the money taken out of circulation was Rs 15.4 lakh crore. Media reports indicate all of this money is back in the banks. So where is the black money that was supposed to be extinguished?

4. Demonetisation was meant to target terrorist funding. On November 22, terrorists killed in an encounter in Bandipora, Jammu and Kashmir, were found with new Rs 2,000 notes. This was when most of the country hadn't seen such notes.

5. Some 150 cases of income tax raids on stashes of old, new and fake currency notes have taken place since November 8. The total amount seized is about Rs 200 crore. Corruption and the black economy don't seem to have been disturbed by demonetisation.

6. Economists says GDP growth may fall to 5.5 per cent in this fiscal year, two per cent below expectations. In absolute terms, India could lose as much as Rs 4.7 lakh crore of GDP.

7. Based on current capacity of printing presses, it could take seven months to print 2,200 crore notes of the new series at a cost of Rs 12,000 crore.

8. Fifty-eight per cent of the rural economy depends on agriculture. 48% per cent of small and marginal farmers rely on cooperative banks for credit. Farmers were left in the lurch as funds in cooperative banks were curtailed in the midst of sowing for the rabi crop. Rural distress will begin to hit the economy very soon.

9. The top three states with the highest percentage of increase in Jan-Dhan accounts in the fortnight following November 8 were Karnataka, Gujarat and Rajasthan. Are these accounts being misused and by whom? Do the state governments know? Which parties are in power in these three states?

10. Time given to common people for exchange of notes: 17 days (up to November 25). Time given to use Rs 1,000 notes in select places: 17 days (up to November 25). Time given to use Rs 500 notes in select places: 33 days (up to December 10). Logic of differential deadlines: Unknown.

11. Time given to black money hoarders under first amnesty scheme in 2015 (Black Money and Imposition of Taxes Act, 2015): Undefined. Time given to black money hoarders under second amnesty scheme in 2016: Four months. Time allowed to pay penalty: Two months.

12. Time given to black money hoarders to disclose their income under Taxation Act passed in November 2016: Undefined.

13. The government announced two amnesty schemes in two years. In the latest one, Rs 67,382 crore was collected from 71,726 declarants, barely 0.5 per cent of the GDP.

14. Since 2014, education costs have risen 13 per cent, housing 10 per cent, healthcare 14 per cent and electricity eight per cent. Add to this frequent hikes in fuel prices despite the fall in global oil prices. Demonetisation has not altered this reality.

15. Eighty per cent of funds to major political parties come from unknown sources. From 2013 to 2015, the BJP has recorded receipt of Rs 977 crore from unknown sources. The government has introduced no electoral reforms to tackle black money, corruption and lack of transparency in electoral funding.

16. Over the purported months of planning for demonetisation, the amount of Rs 100 notes in circulation was increased by only 2.8 per cent (2015-16).

17. The Reserve Bank of India was privately owned when founded in 1935. In 1949, it was nationalised and is now fully owned by the government of India. It is as independent as the government allows it to be.

18. The RBI Act provides for a 21-member board, including 14 independent members, but the central bank has been operating at less than half that strength.

19. The RBI recommended demonetisation of Rs 500 and Rs 1,000 notes hours before the Prime Minister made the announcement. Eight of the 10 board members attended the crucial meeting. Two were absent. Eleven had not been appointed.

20. The number of Bills introduced in Parliament by the government on demonetisation: Zero. In the 1978 demonetisation exercise, the legislature was not bypassed. A Bill was introduced in Parliament and the RBI Act, 1934, was amended.

21. The government has not produced a pre-implementation feasibility report for undertaking such a large exercise by executive order. There is no report, notification or document in the public domain, or in parliament, to show the current implementation plan either. This has been demonetisation by winging it.

22. Two past Prime Ministers were economists - Gulzarilal Nanda and Manmohan Singh. Every Prime Minister since 1956 has had a Chief Economic Advisor (CEA). It is unknown whether the current CEA, or for that matter, any other economist besides the RBI Governor, was consulted on demonetisation.

23. Have queues outside banks and the shortage in currency in the market ended after December 30 or even 31? No.

24. Has a single economist who advocates demonetisation in theory, even Kenneth Rogoff of Harvard University who is frequently referred to by the BJP militia on Twitter, praised the execution following November 8? No.

25. The number of people affected by demonetisation: 1.27 billion minus the Prime Minister and a select few who knew in advance. Benefit to these 1.27 billion people: Unknown.

Derek O'Brien is leader, Parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.